Yes you can or you could just write a method that does all the processing for you and directly returns the height at a given position. Either way is possible but it would probably be beneficial to precalculate the heights and save them out to save realtime processing of the DEM data.
With the way the terrain system is designed it is a very easy process of changing the source of the height data. This was done to make it as simple as possible to experiment with different terrain height generation algorithms. In the next round of R&D videos we will be doing exactly that. We will get rid of the previous height data generator and replacing it with the new one as well as making some changes to the way the grid calculates positional information to make it more accurate.